Jersey Economic Substance Requirements

Answer: The Test should not apply.

The Test only applies to Jersey-incorporated companies and non-Jersey equivalents. All other entities such as Jersey partnerships and trusts which are pass-through for tax purposes (i.e .not taxed as companies) should therefore fall outside of scope, although partners and trustees may still be subject to the test if they are themselves companies.

Whether an entity that is incorporated or established outside Jersey is a non-Jersey equivalent of a company requires careful analysis of the particular circumstances of the entity. However a key indicator will be how it is treated for tax purposes.

This tool is based on legislation in force as at 22 November 2019. It is of a general nature only, it does not take into account specific circumstances and should not be relied upon as legal advice.

Answer: the Test should not apply.

The Test only applies to companies that are tax resident in Jersey, meaning that they are either:

1. a company incorporated in Jersey, unless: (a) its business is centrally managed and controlled outside Jersey in a country or territory where the highest rate at which any company may be charged to tax on any part of its income is 10% or higher; and (b) the company is resident for tax purposes in that country or territory; or
2. a company incorporated outside of Jersey if its business is managed and controlled in Jersey.

Companies that fall outside the above, such as those incorporated in Jersey but tax resident in the UK, should therefore be outside of scope.

A company falling within the above will be a "resident company" for the purposes of the Law.

This tool is based on legislation in force as at 22 November 2019. It is of a general nature only, it does not take into account specific circumstances and should not be relied upon as legal advice.

Answer: The Test should not apply.

The Test only applies to resident companies to the extent they are carrying on any relevant activity generating gross income in a relevant period. A resident company not carrying on any such activity (and therefore outside of the test) will therefore be required to confirm as such in its annual tax return. The Jersey Tax Office then has certain powers to request such further information as it may reasonably require but provided it does not disagree, the economic substance test will not apply.

If there is any doubt as to whether a company is carrying on a relevant activity (noting that only summaries are provided here), please speak to a member of our Jersey taxation and substance team to confirm. Please note that, if a resident company does not meet the Test when required to do so, a progressive penalty system applies and information is shared with authorities in other jurisdictions relevant to the company and its ownership structure. A resident company identified as a 'high risk IP company' is automatically presumed not to meet the Test and enhanced requirements apply. The Comptroller of Taxes also has certain powers to access a resident company's premises and inspect records, with a person obstructing or failing to assist the Comptroller of Taxes in doing so being potentially guilty of a criminal offence.

This tool is based on legislation in force as at 22 November 2019. It is of a general nature only, it does not take into account specific circumstances and should not be relied upon as legal advice.

Answer: The Test should not apply.

The Test only applies where relevant activity generates gross income. Therefore if no gross income has been generated, the Test should not apply for that relevant period, though the resident company should keep in mind it may apply in future years.

This tool is based on the law as at 22 November 2019. It is of a general nature only, it does not take into account specific circumstances and should not be relied upon as legal advice.